Accurate and timely accounting is an important feature at your business. If things go wrong on the accounting front, it can create detrimental consequences for your business. The importance of accounting makes it valuable to have a great system put into practice. With the risk of errors and oversight present, there are several things to know about improving your accounting system. Here are several solutions you can incorporate at your business.
Separate Roles in the Accounting Process
Many small businesses delegate the accounting role to an individual employee or designated bookkeeper. The accounting person is generally responsible for all aspects of the process, including authorization, transactions, recording records, data entry, and reporting. Most fraud cases with businesses have generally occurred when the accounting system is handled by a single individual. Dividing individual jobs within the accounting process can reduce the chances of fraud occurring. Because cash flow management is one of the most important accounting functions, business owns should separate these roles as much as possible.
Use an Online Reporting System
A reporting system consists of available services that can help with each part of the accounting process while giving you more control of it. Many technology companies offer online accounting systems that can provide you access to financial records and data from anywhere. You can have the control to authorize any cash flow or movement. In addition, you can digitally sign off on any changes in policies or transactions before they are initiated.
Whether your business is thriving and you can’t keep up, or you are waiting on clients to pay their invoices, Universal Funding can help your growing company. Call us at 800.405.6035 or complete our rate form today to learn more about invoice factoring and how it can improve your company’s cash flow.
Manage Access to Financial Systems
When committing fraud or theft, many individuals with access to accounting systems can easily hide their footprints. Common footprints include activities related to theft or fraudulent transactions. From a business owner perspective, it is important to ensure you maintain administrative controls over as many accounts possible. In addition, make sure the most sensitive components of your business financials have restricted access. Only people you trust or you have been with for a long period of time should be allowed to have access to this data.
Expand Your Oversight Controls
You may have systems set up to monitor the activity that goes on in the accounting process. However, without oversight, malicious-minded accountants can still slip by you and perform fraudulent activities without your knowledge. You can further augment your security by implementing a higher measure of oversight. By being more involved, you can review bank statements, check payment registers, and monitor bank reconciliations manually. As you perform these oversight actions, be sure to follow policies that also allow you do them ethically as well.
Have Additional Parties Review Your Financial Statements
Your bookkeeping and accounting efforts can be further improved by having a CPA (certified public accountant) review the financial statements. When employees recognize that there are professionals verifying these statements, there is a reduced chance they will commit fraud. In addition, an outside party can help identify inconsistencies and inaccurate patterns in the numbers while helping you better process the data.
The Bottom Line
With the renewed importance of having secure and reliable bookkeeping, it is valuable to have a good accounting system in place. In addition, many businesses face the risk of employees committing fraud or malicious actions for their own benefit. By having a reasonable amount of oversight control, limiting too much access, and separating accounting roles within your organization, you can significantly reduce fraud risks. Consider adding these elements into your accounting blueprint as you review your financial management strategies with your team.
About Universal Funding
Universal Funding is a private funding source that has funded thousands of businesses and more than $2 billion since 1998. We turn your accounts receivable into the funding you need through invoice factoring and can have capital in your hands in a matter of days.